SAUDI PHRMA ISSUES: MEETING WITH DEP. MINISTER OF

UNCLAS RIYADH 002149

SIPDIS

SENSITIVE
SIPDIS

USTR FOR JASON BUNTIN
USDOC FOR TYLER HOFFMAN

E.O. 12958: N/A
TAGS: ETRD EINV KIPR SA
SUBJECT: SAUDI PHRMA ISSUES: MEETING WITH DEP. MINISTER OF
HEALTH

REF: RIYADH 2139


1. (SBU) In a meeting on October 27 with the Foreign
Commercial Service Counselor and the Economic Counselor, Dr.
Mansour N. Al Howasi, Deputy Minister of Health for Executive
Affairs, stated that he will meet with local distributors of
pharmaceuticals to present and discuss the Ministry of
Health's (MOH) proposed pricing scheme on October 28
(reftel). The pricing scheme will not be implemented for
about three months, allowing time for consultation with local
distributors. Emboffs repeatedly encouraged Al Howasi to
directly engage with representatives of multinational
pharmaceutical companies, but after numerous deflections he
eventually stated flatly that he will not meet with them. He
explained that according to Saudi law those companies are
represented in the Kingdom by their local distributors and
that the MOH will deal exclusively with them.


2. (SBU) Al Howasi shared that the new pricing scheme will
not impact pharmaceuticals still enjoying patent protection
in Saudi Arabia. This is a positive development from
industry's perspective as its representatives only expect
products patented in the last five years to be excepted from
the new pricing scheme. Al Howasi further stated that
pharmaceuticals which in his view are "sensitive" and
difficult to manufacture will also be excepted from the
pricing scheme despite having lost patent protection. He
used insulin as an example of this category of
pharmaceuticals.


3. (SBU) Al Howasi repeatedly and at great length explained
his perspective on the MOH's price setting. In his view
setting pharmaceutical prices is not just Saudi Arabia's
sovereign right but a responsibility to its citizens. He
emphasized that the SAG is not capriciously slashing prices,
but rather carefully studied and considered a revised pricing
scheme. He explained that many developed countries'
governments set pharmaceutical prices and mentioned that
former President Clinton proposed to lower pharmaceutical
prices in the United States by 30%. Al Howasi further
pointed out that many countries in the region enjoy lower
prices for medicines, and that many nations do not protect
the intellectual property rights of pharmaceutical patent
holders to the extent that Saudi Arabia does. He believes
that multinational pharmaceutical companies should appreciate
the protection and prices they enjoy in the Kingdom, as he
believes the alternative of instituting a free market system
would be to the companies' disadvantage.


4. (SBU) While the MOH is the SAG entity that issued a
license to a local manufacturer to produce generic Lipitor,
Al Howasi's initial response to Emboffs raising this issue
was that responsibility was with the King Abdulaziz City for
Science & Technology (KACST). However, after Emboffs shared
that KACST agreed that a generic license should not be issued
while a pharmaceutical's patent denial is being appealed and
that Pfizer is appealing the denial of its patent
application, Al Howasi promised to review the matter.


5. (SBU) Emboffs delivered to Al Howasi a copy of a letter
regarding pharmaceutical pricing and the MOH's issuance of a
license to produce generic Lipitor from Christopher A.
Padilla, acting U/S for International Trade at USDOC, to the
Saudi Minister of Commerce and Industry (the Minister of
Health was courtesy copied on the letter). Al Howasi said
that he would ensure that the Minister of Health received the
letter.
FRAKER